LinkedIn Faces Setback in China as It Runs Afoul of New Rules

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LinkedIn’s China headquarters in in Beijing. LinkedIn is a rare foreign internet company in a country that blocks Facebook, YouTube, Google and other online mainstays.CreditGilles Sabrié for The New York Times

SHANGHAI — LinkedIn is often held up as a model of how a foreign internet company can do business in China. Increasingly, it also serves as an example of how difficult that task can be.

This week, the jobs-and-professional-networking service blocked individuals from advertising jobs on its site in China, after it ran afoul of new government regulations requiring it to verify the individuals’ identities, according to a person familiar with the situation. LinkedIn said in a statement that companies could still post job listings but that it did not know when it would again allow individuals to do the same.

In August, China’s government increased scrutiny on internet job postings in response to a rash of online hiring scams, mostly for pyramid schemes. New regulations call for companies to have verification of the identities of those posting job listings.

Beijing has been following up its new regulation with audits, according to the person, who asked not to be named because the person was not authorized to speak publicly.

LinkedIn is a rare foreign internet company in a country that blocks Facebook, YouTube, Google and other online mainstays in the rest of the world. It persists in China by closely adhering to local rules. It censors content that the Chinese authorities consider sensitive or objectionable, limits the ability of members to create or join online groups and has given partial ownership of its Chinese operation to local investors.

But in recent months, Beijing has ratcheted up its already strict internet controls, and such an approach to managing the web takes its toll on companies.

In this case, the new restrictions are the response to an incident in July in which a young college graduate killed himself after being deceived by a pyramid scheme. The 23-year-old, Li Wenxing, got a job as a software developer through an employment website, only to end up forced into becoming part of a pyramid scheme, according to the local news media.

After being forced to borrow hundreds of dollars from family and friends, Mr. Li drowned himself in a small pond along a highway on the outskirts of Tianjin, a port city near Beijing.

His death was one of several since the summer, which has spurred an uproar across the country and prompted a government-led crackdown on pyramid schemes.

The disabling of a revenue-generating tool for LinkedIn is a setback for one of the few major foreign internet companies giving the China market a go. It is not clear how much money LinkedIn, which is owned by Microsoft, makes in China. The amount it charges for an ad depends on its reach and success based on a budget for job postings that clients set up.

The company has struggled to become a major player there. In part, that is because of China’s unique internet culture. While hiring sites are popular, many people opt to manage their professional contacts in the country’s most popular social network, WeChat.

A version of this article appears in print on , on Page B2 of the New York edition with the headline: Crackdown In China Is Costly To LinkedIn. Order Reprints | Today’s Paper | Subscribe